Is greed at all an essential quality of capitalism, or is it something a bit less evil–say, “self interest” in the utility maximizing or profit maximizing sense?
An economist friend drew my attention to this old Phil Donahue interview of economist Milton Friedman. I think it dates back to 1979 (the year I graduated from high school). It has gotten me to wonder what Friedman would say about this Occupy [fill in the blank] movement–and also how the point he is trying to make in this interview says about what the Occupy movement should really be about. Is it some inherent evil of capitalism that the 99 percent are outraged about? Is greed something you find only in capitalism and not in other economic structures? Is greed at all an essential quality of capitalism, or is it something a bit less evil–say, “self interest” in the utility maximizing or profit maximizing sense?
My daughter Emily (a freshman at Sarah Lawrence College) got me thinking about this last question. I have every incentive to pursue my “selfish” interests, optimizing with respect to market prices and my economic capacity. Does it mean I will not provide for my children or even other people’s children, or animals or the environment–or that I will argue that my taxes should be lower and my own part of government benefits larger? No, it depends on what is in my own individual utility function–what makes me “happy.” Part of what may make some of us happy is a more equitable income distribution. (Economists model “altruism” as having other people’s utility levels embedded within our own individual utility function.) Capitalism and the free market system are not necessarily incompatible with a more just society. It seems we might be blaming the economic system when the real problem is probably the political system. Neither an economic system nor a political system can change one’s basic human character. There will always be some not very nice and not very smart (i.e., not so “evolved” or “civilized”) people around, but society doesn’t have to fall because of them, depending on how much of a “say” we give them in our society. I don’t think it’s the “fault” of a capitalist economic system at all.
It strikes me that the problem with our political system is that it’s become out of sync with our individual values–those “selfish” interests (is that different from “self interests,” btw?) that aren’t necessarily inconsistent with maximizing social welfare. Like Friedman says, there will always be many “greedy” people in any kind of society–just as much as there will always be many generous people in any kind of society. I’d like to believe that inherently, most of us are very “good” people. I think we’re very confused people though. We don’t know exactly what we want, and we don’t know how to communicate it within our political system. We’re easily told by our politicians and the media what we should want and value, rather than the other way around.
And then of course, there’s always my pitch for a “benevolent dictatorship” that I could fall back on–emphasis on “benevolent.” My daughter Emily points out that it is apparently the “feminist” in me that believes that that benevolent dictator would have to be a woman!
I find this question–exactly what are we outraged about and protesting about in the “Occupy” movement–so fascinating. I find this Friedman video so thought provoking. What do you think? Is it greedy capitalism, our dysfunctional political system, or some inherent human weakness in all of us? Please discuss!